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Jody Blazek. Tax Planning and Compliance for Tax-Exempt Organizations
Table of Contents
Guide
Pages
tax planning and compliance for tax-exempt organizations
2022 CUMULATIVE SUPPLEMENT
Preface
PART I Qualifications of Tax-Exempt Organizations
CHAPTER 1 Distinguishing Characteristics of Tax-Exempt Organizations
§ 1.4 Role of the Internal Revenue Service
Business Activity Codes
Glossary
9 cybersecurity tips for small not-for-profit organizations
Promote organization-wide awareness
Understand the latest social engineering techniques
Amp up your passwords and use multi-factor authentication
Make sure you install—and update—anti-virus software
Install a SPAM and virus email filter
Install a firewall
Take advantage of the benefits cloud providers
Use caution when choosing service providers
Consider cyberinsurance
Additional Resources:
2021 Nationwide Tax Forums Online course listing on October 10, 2021
§ 1.4 Role of the Internal Revenue Service
§ 1.8 Developments Responding to COVID-19
(a) CARES and SECURE Acts
IRS unveils new People First Initiative; COVID-19 effort temporarily adjusts, suspends key compliance program
(b) IRS Delays in Tax Payment and Return Due Dates
Notes
CHAPTER 2 Qualifying Under IRC § 501(c)(3)
§ 2.2 Operational Test (a) Charitable Class
IRS Private Letter Ruling Number: 202021025
Issues
Facts
Law
Application of Law
Conclusion
(b) Amount of Charitable Expenditures
(b-1) Meaning of Exclusively and Insubstantial
Notes
CHAPTER 3 Religious Organizations
§ 3.2 Churches (b) Definition of Church
Notes
CHAPTER 4 Charitable Organizations
§ 4.1 Relief of the Poor
§ 4.3 Lessening the Burdens of Government
§ 4.5 Advancement of Education and Science
Conclusion
§ 4.6 Promotion of Health (j) § 501(r) Requirements for Hospitals
Notes
CHAPTER 5. Educational, Scientific, and Literary Purposes and Prevention of Cruelty to Children and Animals
§ 5.1 Educational Purposes
(e) Informal Education
Note
CHAPTER 6. Civic Leagues and Local Associations of Employees: § 501(c)(4)
§ 6.2 Qualifying and Nonqualifying Civic Organizations (a) Limitation on Involvement with Political Candidates
Notes
CHAPTER 9 Social Clubs: § 501(c)(7)
§ 9.1 Organizational Requirements and Characteristics (b) Examples of Qualifying and Nonqualifying Clubs
§ 9.4 Revenue Tests (a) 35/15 Test
Notes
CHAPTER 10 Instrumentalities of Government and Title-Holding Corporations
Instrumentalities of Government (c)(1), Governmental Units (c)(2), Title-Holding Corporations(c)(2), Fraternal Beneficiary Societies, Orders, or Associations (c)(8), and Lodges 501(c)(10)
§ 10.6 Requirements for IRC §501(c)(8) and (c)(10)
(a) Differences between (c)(8)s and (c)(10)s
(b) Lodge Requirement
(c) Qualifying for (c)(8) Status
(d) Qualifying for (c)(10) Status
(e) Unrelated Business Income
Notes
CHAPTER 11 Public Charities
§ 11.2 “Inherently Public Activity” and Broad Public Support: § 509(a)(1) (h) Unusual Grants
§ 11.5 Difference Between § 509(a)(1) and § 509(a)(2) (e) Change of Public Charity Category
§ 11.9 Supporting Organization: § 509(a)(3)
Notes
PART II Standards for Private Foundations
CHAPTER 12 Private Foundations—General Concepts
§ 12.4 Termination of Private Foundation Status (e) Mergers, Split-Ups, and Transfers Between Foundations
(h) Notifying the IRS
Note
CHAPTER 13 Excise Tax Based on Investment Income: IRC §4940
§ 13.2 Capital Gains
(c) Nontaxed Gains
Notes
CHAPTER 14 Self-Dealing: IRC § 4941
§ 14.2 Sale, Exchange, or Lease of Property (d) Co-Owned Property
§ 14.5 Transactions That Benefit Disqualified Persons
Notes
CHAPTER 15 Minimum Distribution Requirements: IRC § 4942
§ 15.1 Assets Used to Calculate Minimum Investment Return (c) Exempt Function Assets
§ 15.2 Measuring Fair Market Value (e) Cash and Other Assets
§ 15.4 Qualifying Distributions (a) Direct Grants
(f) Direct Charitable Expenditures
(g) Set-Asides
Notes
CHAPTER 16 Excess Business Holdings and Jeopardizing Investments: IRC §§ 4943 and 4944
§ 16.1 Excess Business Holdings (d) Constructive Ownership
(e) Disposition Periods
§ 16.2 Jeopardizing Investments
Notes
CHAPTER 17 Taxable Expenditures: IRC § 4945
§ 17.3 Grants to Individuals (a) Meaning of “Travel, Study, or Other Purposes”
(f) Seeking Approval
Examples of Awards Approved. Example 1
Example 2
Example 3
§ 17.4 Grants to Public Charities
Notes
PART III Obtaining and Maintaining Tax-Exempt Status
CHAPTER 18. IRS Filings, Procedures, and Policies
Taxpayers may now file the 501(c)(4) application electronically
§ 18.1 IRS Determination Process
(a) Successful Application for Exemption
Law
Application of Law
(d) Group Exemptions
§ 18.2 Annual Filing of Forms 990
EXHIBIT 18.1. Are You Ready to Start a Nonprofit Organization. A Reality Check
EXHIBIT 18.2. Guidelines for New Nonprofits
§ 18.2 Annual Filing of Forms 990
Transition for Form 990-EZ
Forms 990 and 990-PF
Form 990-T
Form 4720
(a-1) Authorized E-file Provider Requirements
Frequently Asked Questions: E-file Requirements for Specified Tax Return Preparers (sometimes referred to as the e-file mandate)
(b) Design of Form 990
§ 18.3 Reporting Organizational Changes to the IRS
§ 18.4 Weathering an IRS Examination (a) Examination Methods
(b) Who Handles the Examination?
(e-1) IRS Priority Guidance Plan
(f) Tax Inquiries and Examination of Churches
(g) Examinations Regarding Easement Valuation
Notes
CHAPTER 19. Maintaining Exempt Status
§ 19.1 Checklists
EXHIBIT 19.13. Private Foundation Compliance Rules
EXHIBIT 19.14. PRE-GRANT INQUIRY
EXHIBIT 19.15. Expenditure Responsibility Control Checklist
EXHIBIT 19.16. Blazek & Vetterling
CHAPTER 20. Private Inurement and Intermediate Sanctions
§ 20.2 Salaries and Other Compensation
§ 20.10 Intermediate Sanctions (d) Excess Benefit Transaction
(j) New § 4960 Excise Tax
1. No Grandfathering
2. “ATEO” (Applicable Tax-Exempt Organization) Includes Most Tax-Exempts
3. Must Aggregate ATEOs With Related Organizations (the “Related Group”): 50% Test
4. Covered Employees: Once Covered Always Covered—But With Some Relief
5. Special Timing Rule for Remuneration
6. Beware of “Parachutes”: They're Easier to Trigger Than You Might Expect
7. Medical Services Exception: Reasonable, Good-Faith Allocation
8. Applicable Year for Organizations With Non-Calendar Fiscal Years
9. Allocation and Payment of Excise Tax
10. Per Se Unreasonable and Non-Good-Faith Interpretations
§ 20.11 New § 4960 Excise Tax on Excess Compensation
Notes
CHAPTER 21. Unrelated Business Income
§ 21.4 Definition of Trade or Business
§ 21.8 Unrelated Activities (b) Services
§ 21.10 Income Modifications (d) Royalties
§ 21.11 Calculating and Minimizing Taxable Income
Notes
CHAPTER 23. Electioneering and Lobbying
§ 23.3 Tax on Political Expenditures (e) IRS Guidance on Political Activity
Note
CHAPTER 24. Deductibility and Disclosures
§ 24.1 Overview of Deductibility (a) Contribution Defined
(b) Limitations on Deductions
§ 24.2 The Substantiation and Quid Pro Quo Rules
(b) Substantiation Rules
§ 24.3 Valuing Donor Benefits
Notes
CHAPTER 25. Employment Taxes
§ 25.1 Distinctions Between Employees and Independent Contractors (b) Independent Contractors
(c) Employee Benefits
(f) CARES Act Clarification
§ 25.3 Reporting Requirements (g) Form 1099-INT
(h) Refunded Donation
Notes
CHAPTER 27. Cryptocurrency
§ 27.1 What Is Cryptocurrency?
§ 27.2 What Are the Various Kinds of Cryptocurrency?
§ 27.3 Should Nonprofits Be Involved in Cryptocurrency?
§ 27.4 Cryptocurrencies and the Internal Revenue Service
IRS frequently asked questions on virtual currency13
Notes
Index
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